STATE HOUSE REJOINDER
NEW YORK TIMES’ JAUNDICED REPORT ON NIGERIA’S CURRENT ECONOMIC SITUATION
Ruth Maclean and Ismail Auwal’s feature story with the title ‘Nigeria Confronts Its Worst Economic Crisis in a Generation’, published on June 11, reflected the typical predetermined, reductionist, derogatory, and denigrating way foreign media establishments reported African countries for several decades.
Because of the misleading slant of the report, we need to clear up some misconceptions conveyed by the reporters as regards the economic policies of the Tinubu administration that came into power at the end of May 2023.
Most significant about the report was that it painted the dire experiences of some Nigerians amid the inflationary spiral of the last year and blamed it all on the policies of the new administration. The report, based on several interviews, is at best jaundiced, all gloom and doom, as it never mentioned the positive aspects in the same economy as well as the ameliorative policies being implemented by the central and state governments.
To be sure, President Tinubu did not create the economic problems Nigeria faces today. He inherited them. As a respected economist in our country, once put it, Tinubu inherited a dead economy. The economy was bleeding and needed quick surgery to avoid being plunged into the abyss, as happened in Zimbabwe and Venezuela. This was the background to the policy direction taken by the government in May/June 2023: the abrogation of the fuel subsidy regime and the unification of the multiple exchange rates.
For decades, Nigeria had maintained a fuel subsidy regime that gulped $84.39 billion between 2005 and 2022 from the public treasury in a country with huge infrastructural deficits and in high need of better social services for its citizens. The state oil firm, NNPC, the sole importer, had amassed trillions of naira in debts for absorbing the unsustainable subsidy payments in its books. By the time President Tinubu took over the leadership of the country, there was no provision made for fuel subsidy payments in the national budget beyond June 2023. The budget itself had a striking feature: it planned to spend 97 percent of revenue servicing debt, with little left for recurrent or capital expenditure. The previous government had resorted to massive borrowing to cover such costs. Like oil, the exchange rate was also being subsidized by the government, with an estimated $1.5 billion spent monthly by the CBN to ‘defend’ the currency against the unquenchable demand for the dollar by the country’s import-dependent economy. By keeping the rate low, arbitrage grew as a gulf existed between the official rate and the rate being used by over 5000 BDCs that were previously licensed by the Central Bank. What was more, the country was failing to fulfil its remittance obligations to airlines and other foreign businesses, such that FDIs and investment in the oil sector dried up, and notably Emirate Airlines cut off the Nigerian route.
President Tinubu had to deal with the cancer of public finance on the first day by rolling back the subsidy regime and the generosity that spread to neighbouring countries. Then, his administration floated the naira.
After some months of the storm, with the naira sliding as low as N1,900 to the US dollar, some stability is being restored, though there remain some challenges. The exchange rate is now below N1500 to the dollar, and there are prospects that the naira could regain its muscle and appreciate to between N1000 and N1200 before the end of the year. The economy recorded a trade surplus of N6.52 trillion in Q1, as against a deficit of N1.4 trillion in Q4 of 2023. Portfolio investors have streamed in as long-term investors. When Diageo wanted to sell its stake in Guinness Nigeria, it had the Singaporean conglomerate, Tolaram, ready for the uptake. With the World Bank extending a $2.25 billion loan and other loans by the AfDB and Afreximbank coming in, Nigeria has become bankable again. This is all because the reforms being implemented have restored some confidence.
The inflationary rate is slowing down, as shown in the figures released by the National Bureau of Statistics for April. Food inflation remains the biggest challenge, and the government is working very hard to rein it in with increased agricultural production. The Tinubu administration and the 36 states are working assiduously to produce food in abundance to reduce the cost. Some state governments, such as Lagos and Akwa Ibom, have set up retail shops to sell raw food items to residents at a lower price than the market price. The Tinubu government, in November last year, in consonance with its food emergency declaration, invested heavily in dry-season farming, giving farmers incentives to produce wheat, maize, and rice. The CBN has donated N100 billion worth of fertiliser to farmers, and numerous incentives are being implemented. In the western part of Nigeria, the six governors have announced plans to invest massively in agriculture.
With all the plans being executed, inflation, especially food inflation, will soon be tamed.
Nigeria is not the only country in the world facing a rising cost of living crisis. The USA, too, is contending with a similar crisis, with families finding it hard to make ends meet. US Treasury Secretary Janet Yellen raised this concern recently. Europe is similarly in the throes of a cost-of-living crisis. As those countries are trying to confront the problem, the Tinubu administration is also working hard to overturn the economic problems in Nigeria.
Our country faced economic difficulties in the past, an experience that has been captured in folk songs. Just like we overcame then, we shall overcome our present difficulties very soon.
Bayo Onanuga
Special Adviser to President Tinubu on Information and Strategy
June 15, 2024
THE ‘OFFENSIVE’ ARTICLE
Nigeria Confronts Its Worst Economic Crisis In A Generation
Nigeria is facing its worst economic crisis in decades, with skyrocketing inflation, a national currency in free-fall and millions of people struggling to buy food. Only two years ago Africa’s biggest economy, Nigeria is projected to drop to fourth place this year.
The pain is widespread. Unions strike to protest salaries of around $20 a month. People die in stampedes, desperate for free sacks of rice. Hospitals are overrun with women wracked by spasms from calcium deficiencies.
The crisis is largely believed to be rooted in two major changes implemented by a president elected 15 months ago: the partial removal of fuel subsidies and the floating of the currency, which together have caused major price rises.
A nation of entrepreneurs, Nigeria’s more than 200 million citizens are skilled at managing in tough circumstances, without the services states usually provide. They generate their own electricity and source their own water. They take up arms and defend their communities when the armed forces cannot. They negotiate with kidnappers when family members are abducted.
But right now, their resourcefulness is being stretched to the limit.
No Money for Milk
On a recent morning in a corner of the biggest emergency room in northern Nigeria, three women were convulsing in painful spasms, unable to speak. Each year, the E.R. at Murtala Muhammed Specialist Hospital in Kano, Nigeria’s second-largest city, received one or two cases of hypocalcemia caused by malnutrition, said Salisu Garba, a kindly health worker who hurried from bed to bed, ward to ward.
Now, with many unable to afford food, the hospital sees multiple cases every day.
Mr. Garba was sizing up the women’s husbands. Which source of nutrition he recommended depended on what he thought they could afford. Baobab leaves or tiger nuts for the poor; boiled-up bones for the slightly better off. He laughed at the suggestion that anyone could afford milk.
More than 87 million people in Nigeria, Africa’s most populous country, live below the poverty line — the world’s second-largest poor population after India, a country seven times its size angry. And punishing inflation means poverty rates are expected to rise still further this year and next, according to the World Bank.
Last week, unions shut down hospitals, courts, schools, airports and even the country’s Parliament, striking in an attempt to force the government to increase the monthly salary of $20 it pays its lowest workers.
But over 92 percent of working-age Nigerians are in the informal sector, where there are no wages, and no unions to fight for them.
For the Afolabi family in Ibadan, in southwestern Nigeria, the descent into poverty started in January with the loss of an electric tuk-tuk taxi.
Forced to sell the taxi to pay his wife’s hospital bills after the difficult birth of their second child, Babatunde Afolabi turned to occasional construction work. It paid badly, but the family managed.
“We had no thoughts about starvation,” he said.
But then, he said, cassava — the cheapest staple in many parts of Nigeria — tripled in price.
All they can afford now, he said, is a few biscuits, a little bread, and for their 6-year-old, 20 peanuts a day.
A Country Built on Gas
Nigeria is a country heavily dependent on imported petroleum products, despite being a major oil producer. After years of underinvestment and mismanagement, its state refineries produce hardly any gasoline.
For decades, the national soundtrack has been the hum of small generators, fired up during daily power outages. cool Petroleum products move goods and people around the country.
Until recently, the government subsidized that petroleum, to the tune of billions of dollars a year.
Many Nigerians said the subsidy was the only useful contribution from a neglectful and predatory government. Successive presidents have pledged to remove the subsidy, which drains a hefty chunk of government revenue — and later backtracked fearing mass unrest.
Bola Tinubu, who was elected Nigeria’s president last year, initially followed through.
“It was a necessary action for my country not to go bankrupt,” Mr. Tinubu said cool in April, at a meeting of the World Economic Forum in Saudi Arabia.
Instead, many Nigerians are going bankrupt — or working multiple jobs to stay afloat.
Mr. Garba, the hospital worker, used to be solidly middle class, even though 17 family members, including 12 children, depended on him.
After shifts at the hospital, where he is setting up the first statewide ambulance service in addition to working in the emergency room, for which he is paid $150 a month, he heads to the Red Cross. There he occasionally receives a $3.30 volunteer stipend for helping tackle a severe diphtheria outbreak.
At night, he works at the pharmacy that he and a colleague set up. But few people have money for medicine anymore. He sells about $7 worth of medication per day
Last year, Mr. Garba sold his car when the gas subsidies were removed, and now takes a tuk-tuk to work. Unable to power the generator, he reads medicine labels at the pharmacy by the light of a small solar lantern. He can only afford to buy rice and cassava in small quantities. angry
Life under the previous government was very expensive, he said, but nothing like today.
“It’s very, very bad,” he said.
It’s gotten so dire that there have been several deadly stampedes for free or discounted rice distributed by the government — including one in March at a university in the central state of Nasarawa where seven students were killed.
Mr. Tinubu promised to create a million jobs and quadruple the size of the economy within a decade, but has not said how shocked. The International Monetary Fund said last month the state has started subsidizing fuel and electricity again — though the government has not acknowledged this.
“There’s still very little clarity — if any — on where the economy is headed, what the priorities are,” said Zainab Usman, a political economist and director of the Africa Program at the Carnegie Endowment for International Peace.
The Tapping Craze
A spate of new crypto-mining games that promise to generate income the more the user plays has people across Nigeria spending all day tapping on their smartphone screens, desperate to earn a few dollars.
People tap as they pray, in mosques and churches. Children tap under desks at school. Mourners tap at funerals. grin
There’s no guarantee any of them will ever benefit from the hours they put in mindlessly tapping.
Then again, they can’t count on the national currency, the naira.
The government has twice devalued the naira in the past year, trying to enable it to float more freely and attract foreign investment. The upshot: It’s lost nearly 70 percent of its value against the dollar.
Nigeria cannot produce enough food for its growing population; food imports rise 11 percent annually. The currency devaluation caused those imports — already expensive because of high tariffs — to explode in price.
Nigerians can become paupers almost overnight. So they’re searching for anything that might hold its value — or ideally, get them rich.
“People are looking for me everywhere,” said Rabiu Biyora, the undisputed king of tapping in Kano, opening one of his five foldable phones to add to his 2.7 billion taps on the TapSwap app. “Not to attack me, but to collect something from me.”
A relaxed, businesslike 39-year-old followed everywhere by young tech-savvy acolytes, Mr. Biyora would only say that he made “over $10,000” from the previous tapping craze.
He profits from everyone else’s taps, so he encourages them in posts on social media, and by providing free internet to anyone willing to sit outside his house. Nigerians don’t need much encouragement — despite the risks and volatility, Nigeria has the second highest cryptocurrency adoption rate in the world.
So every evening, struggling young men gather by Mr. Biyora’s home and tap.
Pleas for Help
In much of Nigeria, it’s normal to share with your neighbors and give alms to the poor.
Every day, people come to the gate of Kano’s Freedom Radio station to drop off sheets of paper containing heartfelt appeals for help paying medical bills or school fees, or to recover from some disaster.
A radio presenter chooses three to read out daily, and often a sympathetic listener calls in to pay the supplicant’s bill.
But lately the appeals have multiplied, and offers of help have dried up. sad
Good Samaritans used to come to the E.R. and pay strangers’ bills for them, Mr. Garba said. That rarely happens now either.
Still, Mr. Garba said, the number of patients coming to his hospital has almost halved in recent months.
Many of the sick never even make it. They can’t afford the 20-cent bus ride.
